V.K. Dewan And Co. vs N.B.C.C. And Anr.
1993 Latest Caselaw 47 Del

JUDGMENT

Dalveer Bhandari, J.

(1) The plaintiff has filed this Suit under Order 37 of the Code of Civil Procedure. Summons were issued to the defendants under Form Iv, Schedule B of Order 37 of the Code of Civil Procedure on 17.12.91 by the order of this court. On 20th August, 1992, summons for judgment were issued for 21st September, 1992. Reply has been filed. Thereafter an application under Order 37 Rule 3(5) and Section 151, Code of Civil Procedure for leave to defend and contest the Suit was filed by the defendants.

(2) Brief facts are recapitulated which are necessary for the disposal of this application.

(3) The plaintiff was the highest tenderer in the category of tenders for which he sent his offer to the defendants for construction of community centre-cum-shopping complex at Pragati Vihar, New Delhi. The lowest rated tender was accepted. As per the tender document, earnest money was to be deposited by the plaintiff. After the finalisation of the tender, the defendant corporation offered to return the earnest money but the plaintiff refused to take it unless be was paid interest at the rate of 18 per cent per annum on the earnest money of Rs.l,02,000.00 . It is the admitted case of the parties that there was no contract between the parties to pay the interest on the earnest money. The tender of- the plaintiff was not accepted. Immediately thereafter, the earnest money was offered without interest but the plaintiff refused to accept the same. The defendants' plea was that there has been no contract between the parties whereby they are liable to pay interest on the tender amount.

(4) It was contended that there was no usage which had the force of law by which the plaintiff can claim interest on the earnest money.

(5) The defendants have mentioned in this application that the Suit as filed by the plaintiff is not maintainable. It is mentioned in the application which has been further elaborated in the arguments that there has been no written contract between the parties nor is there any usage to pay the interest on the earnest money. It is further mentioned that the plaintiff has no cause of action against the defendant and the suit is liable to be rejected under Order 7 Rule 11 of the Code of Civil Procedure.

(6) The learned counsel for the defendants has placed reliance on Bengal Nagpur Railway Co. Ltd. vs. Ruttanji Ramji and others, A.I.R. 1938 Privy Council 67.In this case it has been held that interest for the period prior to the date of. the suit may be awarded, if there is an agreement for the payment of interest at a fixed rate, or it is payable by the usage of trade having the force of law, or under the provision of any substantive law entitling the plaintiff to recover interest, as for instance the Court may award interest at the rate of 6 per cent per annum, when no rate of interest is specified in a promissory note bill or bill of exchange. The learned counsel has also placed reliance on Ganesh Bakhsh v. Harihar Bakhsh, (1904) Vol.XXVI, Indian Law Reports, Allahabad, 299. In this judgment, it has been held that no interest be given under the provisions of the Interest Act when there is no written instrument. The learned counsel has also placed reliance on Santosh Kumar v. Bhai Mool Singh . It was held that the interest becomes payable only if there is a contract or agreement, or if there is usage or practice which has the force of law. In the instant case, the defendant is not liable to pay any interest on the earnest money. There has been no agreement between the parties and the Government of India has never paid any interest on the earnest money.

(7) The expression of any opinion on this controversy at this stage, would mean disposal of the suit because this is the only short issue which is involved in the entire suit. It would not be proper to decide this issue without affording any opportunity to the parties to adduce the evidence.

(8) I have heard learned counsel for the parties and perused the relevant documents and judgments, including the judgments of the Supreme Court and Privy Council. In the facts and circumstances of this case, it cannot be said that the defendant's defense is frivolous and sham, and has been taken only to delay the entire proceedings. In fact, any authoritative pronouncement would determine the fate of large number of cases.

(9) In the reply, it has been clearly-mentioned that the defendants were always ready and willing to pay the earnest money to the plaintiff. It was only the plaintiff who bad refused to accept the same without interest. There is no denial of fact that the earnest money has been given by the plaintiff and is lying with the defendants and they have been ready and willing to pay the earnest money, but the plaintiff refused to accept the same.

(10) It may be pertinent to mention that the learned counsel for the defendant even offered to pay the earnest money without interest forthwith, during the course of the bearing but the learned counsel for the plaintiff declined to accept the same. Therefore, in the facts and circumstances of this case and in the interest of justice, I direct the defendant to deposit the entire earnest money in the court within three weeks from today, in the name of the Registrar, who in turn, is directed to deposit this amount in the short term deposit of six months. The defendants are accordingly granted leave to defend the Suit subject to their depositing the Suit amount minus interest and costs. The I.A. is accordingly disposed of.

(11) The defendants are directed to file written statement within 4 weeks from today. The replication, if any, within 2 weeks thereafter. To be listed before Deputy Registrar on 14th April, 1993 for admission/denial of documents and before this court on 19th April, 1993 for framing of issues.